It finally happened. TikTok CEO said that its parent company, ByteDance (BNDCE), signed a binding agreement to form a U.S. joint venture. American investors will be the majority owners, according to Bloomberg.
Chew wrote in a memo that confirmed the agreement involved Oracle (ORCL), Silver Lake, and MGX. The U.S. will run TikTok as an independent entity. It will have the control to protect the U.S. data.
Good news for Oracle
For months, stock markets sold off shares of Oracle. The price for CDS (credit default swaps), which are insurance instruments on Oracle’s debt, rose in value. Debt holders grew increasingly concerned about the company’s high expenditures in AI-related hardware. Unfortunately, OpenAI is burning too much cash. It would need to raise funds through an initial public offering. That might help alleviate OpenAI’s cash flow concerns.
TikTok is a prized social networking content platform that broadens Oracle’s business. It would not need to rely on revenue from renting AI servers. Additionally, stock markets may overlook its slow-growing core business in legacy databases.
In after-hours trading on Thursday, ORCL stock gained 5.3% to trade at nearly $190. ORCL stock peaked at $345.72 in September. Back then, euphoric stock markets treated their bookings revenue as guaranteed, future revenue.
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